Editorial: An Economic Argument for Quality

By Len Monheit
[email protected]
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Financial and government news dominated this past week, with numerous companies reporting quarterly financial results and with the deadline almost upon the industry for comments regarding FDA’s proposed supplement GMP’s.

Dean Foods, Horizon Organic, Wild Oats, Reliv and others reported, generally with strong sales growth, and with the exception of the ingredient companies, strong net income figures as well.

On the government front, in the aftermath of the ephedra hearings of a few weeks ago, and likely in a pre-emptive strike against Senator Durbin’s Bill S. 722, which, if passed, could challenge many of the provisions of DSHEA, Senators Tom Harkin (D-Iowa) and Orrin Hatch (R-Utah) have introduced a bill (SB 1539) to provide funds for the complete implementation and enforcement of the 1994 DSHEA legislation. This bill would provide $205 million in funding over five years, and would obligate Health and Human Services to report on number of personnel, GMP enforcement and activities, adverse event programs and other activities dealing specifically with dietary supplements.

The Industry and Trade Association position has been strongly stated. They contend that DSHEA provides FDA with adequate authority to regulate and ensure consumer safety with dietary supplements. They further contend that the problem is not with the legislation itself but with implementation and enforcement, citing the lack of GMP’s as an example of FDA’s commitment to DSHEA. FDA, on the other hand, has publicly stated that its hands are bound by DSHEA and it has inadequate authority. It has also in the past suggested that it does not have the funds to effectively enforce its authority in the industry, and with the funding this new bill would provide, that argument is presumably dismantled, and FDA (HHS) would have an obligation to document and substantiate its activities.

Which brings us to the proposed GMP rule. The comment period closes next week and the industry’s trade associations have been compiling survey results, data, and member submissions into consolidated responses while at the same time encouraging individual submissions to the FDA. Some have expressed frustration at industry apathy or lack of hard data provided to challenge the proposed rule.

Two key concerns which arose from a study of the proposed rule or from interactions with FDA as they discussed the proposal at meetings across the country were the costs and benefits and the level of testing required. (There were other contentious issues, but these, and they are related, were consistently expressed as flaws and evidence that FDA either did not, or chose not to understand the realities of the supplements industry).

Depending on who you talk to, the FDA numbers regarding costs of compliance under the rule as proposed are in error by between six and fifty times. The financial and market benefits espoused in the rule would almost certainly never materialize. (Clearer information about product quality would result in time savings in consumer choices which would lead to financial benefit and the cost associated with product recalls would be reduced) And even with questionable numbers, FDA admits that several hundred industry companies will be unable to comply.

It will be some time before feedback and comments are incorporated into a final rule. In the meantime, there are obvious elements that will definitely be part of this rule, and are in fact, already part of the NNFA or NSF quality and certification programs. There is also an economic argument to support GMP’s and certification.

Smart companies have realized that starting compliance activities now makes sense. Raising expectations and strengthening relationships with suppliers makes sense too, whether these suppliers are providing ingredients or contract manufacturing services. Increasing levels of documentation and record-keeping, ( training records, vendor qualification and raw material handling, or manufacturing) , while resource intensive, is practical from a quality control standpoint, whether this is mandated or not. These practical aspects of the GMP”s can have a positive economic impact on an organization.

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